At what point does a photograph become Photoshopped enough to qualify as “100% original work,” and as something separate from what the original photographer created?

This question is put to the test as a contest winner's work turns out to have been a heavily Photoshop-manipulated version of an image shot by another photographer who did NOT give permission for his work to be manipulated or submitted.

Doesn't take much to realize that this is, without doubt, a complete rip-off. It's even pretty bad Photoshopping. Looks like the guy did a Ctrl T and reshaped the squares a little. Hope the guy gets sued!